9.The leverage ratio is defined as the capital measure divided by the exposure measure, expressed as a percentage:

10.The capital measure is Tier 1 capital as defined for the purposes of the Central Bank risk-based capital framework, subject to transitional arrangements. In other words, the capital measure for the leverage ratio at a particular point in time is the applicable Tier 1 capital measure at that time under the risk-based framework.

11.The minimum requirement for the leverage ratio is established in the Central Bank’s Regulations Re Capital Adequacy.

12.The Standards includes the possibility that the Central Bank may consider temporarily exempting certain central bank “reserves” from the leverage ratio exposure measure to facilitate the implementation of monetary policies in exceptional macroeconomic circumstances. In this context, the term “reserves” refers to certain bank balances or placements at the Central Bank. Certain other jurisdictions have pursued monetary policies that resulted in a significant expansion of such bank balances at the Central Bank, for example through policies commonly described as “quantitative easing.” While the Central Bank has no plan to implement such policies, the inclusion of this flexibility in the Standards ensures that, in the event that such policies were to be implemented, the minimum leverage requirement could be adjusted in a manner that allows it to continue to serve its appropriate prudential role. Per the requirements of the BCBS framework, the Central Bank would also increase the calibration of the minimum leverage ratio requirement commensurately to offset the impact of exempting central bank reserves, since actual bank leverage ratios would be expected to increase due to the exclusion of these exposures.